Why Facebook Just Opened an Online Store

Facebook CEO Mark Zuckerberg. Photo: Jim Merithew/Wired

Citing its unique ability to recommend products, Facebook opened an online gift store. The move edges the social network onto the turf of e-commerce king Amazon, but at an opportune time: Amazon is busy making movies, computer hardware, cloud computing services, and entering other markets far afield from its core business of selling physical goods.

Not that Facebook is trying to usurp Amazon just yet. The launch of Facebook Gifts is modest: Facebook is emphasizing sub-$50 products like socks, cupcakes, teddy bears, and Starbucks gift cards. The idea is that Facebook will see words like “happy birthday” or “congratulations” on someone’s wall and prompt friends to buy the person something through the new store.

It’s an obvious and proven idea, one Facebook acquired when it bought year-old mobile gifting startup Karma in May. In the ensuing months, Facebook has rebranded the service and created a desktop version of the app, which is what is being launched today as Facebook Gifts. (From 2007 to 2010, Facebook operated a store by the same name, but it only sold virtual goods.)

In an interview with Wired Business in July, Facebook’s director of advertising product Gokul Rajaram explained Facebook’s thinking about gifts:

The reason it all germinated was because we saw that people wishing each other happy birthday is a really common social norm on Facebook. Because Facebook will basically tell you which of your friends have birthdays today. So we said, this could be a really interesting way to enhance that experience. In addition to saying ‘happy birthday’ you could actually give a small gift. We think that could be a really interesting thing that works on mobile, on the desktop, and is something that fits in with the norms.

In other words, Facebook is trying to monetize common, naturally occurring behavior on its network in a way that feels more natural than other Facebook ads, like “sponsored stories” that pop up when one of your friends mentions a business. Facebook is launching that business across mobile and desktop, and doing so only about four months after the acquisition of Karma.

It’s a smart approach. If anyone is better positioned than Amazon to recommend products to people, it’s Facebook, and the company is off to an auspicious start. It’s a small start, but then so was Facebook itself.